No tax hike in proposed 2020 Elgin budget but property owners will pay 6% more for water, 2% more for sewer services

Elgin homeowners won’t see a property tax increase as a result of the proposed 2020 budget, but water and sewer rates will be going up as the city invests in utility improvements to maintain its infrastructure, officials said.

The city will use $15 million in general fund reserves to help pay for city operations and ensure the $275 million budget is balanced and in the black, City Manager Rick Kozal said.

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As a result, the tax levy will remain flat but taxpayers will see a 6% increase in the water rate and a 2% increase in the sewer rate, officials said.

The tentative budget numbers were released Wednesday night at the first of seven Elgin City Council meetings that will be held to review the proposed 2020 spending plan and three-year financial plan. The budget is scheduled to be adopted Dec. 18.

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The numbers are in line with Elgin’s three-year financial plan, Kozal said.

Utility improvements include $3.1 million in upgrades to the water distribution system, $2 million in electrical upgrades to the Leo Nelson Water Treatment Plant, and $1 million for 10 deep wells that supplement and serve as a backup to the city’s water supply from the Fox River, Kozal said.

Staff will provide more detailed information at budget meetings in November and December.

Wednesday’s presentation included a red flag about funding for the Parks and Recreation Department.

“Part of the job we have as a professional staff here is to provide the council with insight when we are coming into headwinds,” Kozal said. “We can see on the horizon some potential difficulty arising and that’s as relates to what is necessary to continue the service level provided by our Parks and Recreation Department.”

Elgin is one of the few municipalities with its own department for those services, meaning taxpayers don’t pay a tax for it separate from the one paid to the city. The department includes the operating budgets for the Hemmens Cultural Center, Sports Complex, The Edward Schock Centre of Elgin, Wing and Lords Park aquatic centers, Eastside Recreation Center and the Hawthorne Hill Nature Center as well as the costs associated with special events, cultural arts and community recreation activities.

“Program fees in the parks and rec department cover only about one-half of the department’s expenses so the balance has traditionally been subsidized by a revenue transfer from the general fund,” Kozal said.

The department has used cash carryover and cash reserves to cover the shortfall in the past, typically in the neighborhood of about $2 million, he said. This year the deficit requires $4.5 million to be added to the general fund, he said.

The larger-than-normal funding difference is tied to increases in the minimum wage and escalating maintenance costs for facilities and parks, Kozal said. Parks and rec would be short $7.5 million if not for the General Fund transfer or cash reserves, he said.

“This year’s budget deliberations will begin discussions on options for addressing the recreation fund’s structural deficit in the ensuing general fund financial plans,” he said.